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Crude oil futures settled slightly lower Monday following weaker than expected Q2 economic data in China that raised concerns about the outlook for oil demand.
China’s GDP expanded by 4.7% in the April-June quarter, official data showed, its slowest since Q1 2023 and well below expectations as well as the previous quarter’s 5.3% growth, with retail sales growth slumping to an 18-month low as deflationary pressures forced businesses to cut prices on a wide range of products.
The sharper than expected growth slowdown caused Goldman Sachs to lower its forecast for China’s 2024 growth to 4.9% from 5.0%, saying the government needs more policy easing through the rest of this year, especially on the fiscal and housing fronts.
“Given that China is expected to make up the majority of oil demand growth this year, it is not surprising that signs of weakness in Chinese demand are a concern,” ING strategists Warren Patterson and Ewa Manthey said, Dow Jones reported.
Front-month Nymex crude (CL1:COM) for August ended -0.3% to $81.91/bbl, and Brent crude (CO1:COM) finished -0.2% at $84.85/bbl, a second straight session of losses for both benchmarks.
Meanwhile, U.S. natural gas futures started the week lower, with concerns about lingering impact on demand from Hurricane Beryl, including a continued outage at Freeport LNG, while weekend weather forecasts showed temperatures cooling as of midweek.
Front-month Nymex natural gas (NG1:COM) for August delivery closed -7.3% to $2.158/MMBtu, the lowest settlement value since May 3.
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The oil industry was “very much in favor of a lot” of Donald Trump’s agenda while he was president, but is concerned about a second Trump administration’s tariff proposals, American Petroleum Institute CEO Mike Sommers told Marketwatch at the Republican National Convention in Milwaukee.
“We want to make sure that our products can get to overseas markets without potential tariffs, and, if you put tariffs in place in the United States, it’s inevitable that there’s going to be a trade war throughout the rest of the world,” Sommers said in the interview.
But Trump’s previous presidency included “a real focus on increased American development of our resources, and I think the opposite has been true of the Biden administration,” Sommers said, noting that on Monday the incumbent president announced it might remove more acreage from development in Alaska.